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January 26, 2009

Old Dogs, New Tricks, All Change

Republicans are out, Democrats are in, and everyone must change sides! This dynamic may create awkwardness for those who have left a paper trail but will also create a target-rich environment for others. Let's start with the Most Influential Lib in the media today, Nobel Laureate Paul Krugman, writing in 2009 about the Obama stimulus recovery plan:

But the obvious cheap shots don’t pose as much danger to the Obama
administration’s efforts to get a plan through as arguments and
assertions that are equally fraudulent but can seem superficially
plausible to those who don’t know their way around economic concepts
and numbers. So as a public service, let me try to debunk some of the
major antistimulus arguments that have already surfaced. Any time you
hear someone reciting one of these arguments, write him or her off as a
dishonest flack.

First, there’s the bogus talking point that the
Obama plan will cost $275,000 per job created. Why is it bogus? Because
it involves taking the cost of a plan that will extend over several
years, creating millions of jobs each year, and dividing it by the jobs
created in just one of those years.

It’s as if an opponent of
the school lunch program were to take an estimate of the cost of that
program over the next five years, then divide it by the number of
lunches provided in just one of those years, and assert that the
program was hugely wasteful, because it cost $13 per lunch. (The actual
cost of a free school lunch, by the way, is $2.57.)

The true cost
per job of the Obama plan will probably be closer to $100,000 than
$275,000 — and the net cost will be as little as $60,000 once you take
into account the fact that a stronger economy means higher tax
receipts.

OK, keep that "dishonest flack" exhortation in mind and ponder this from 2003, when Krugman's topic was the Bush tax cuts:

Did you know that President Bush's economic plan will create 1.4
million jobs? Oh, and did I mention that the plan will create 1.4
million jobs? And don't forget, the plan will create 1.4 million jobs.

...

Not that the budget cost
is minor. The average American worker earns only about $40,000 per
year; why does the administration, even on its own estimates, need to
offer $500,000 in tax cuts for each job created? If it's all about
jobs, wouldn't it be far cheaper just to have the government hire
people? Franklin Roosevelt's Works Progress Administration put the
unemployed to work doing all kinds of useful things; why not do
something similar now? (Hint: this would be a good time to do something
serious, finally, about port security.)

Hmm, ten years of tax cuts with a total cost of $500,00 per job weighed against one year of earnings. Gee, it's almost as if the writer was making a phony statement about the school lunch program, or, dare we say it, was a dishonest flack.

While I enjoy these waves of nostalgia let me toss in the "explanation" eventually presented by Krugman at his website and recounted in this old post:

No, I didn't forget to divide by 10. (For God's sake: whatever
you think of my politics, I am a competent economist, and know how to
use numbers.) What I foolishly assumed readers would know - this isn't
condescension, I really was foolish - is that no serious economist
thinks that a tax cut or spending increase will have any effect on
employment more than a couple of years from now. The reason is
straightforward: normally the economy is operating more or less at full
employment, and any demand stimulus from a tax cut will be offset by an
interest rate increase by the Fed. The Fed, of course, polices the
economy to prevent inflationary pressures. And eventually we will
return to normal circumstances.

The only situation in which a tax cut or spending increase
creates jobs is when the economy is operating below full employment,
and the Fed is unable to remedy the situation.

So Krugman's point was that many of the 1.4 million jobs projected to be created by the Bush plan would have been created by the natural working of the economy over ten years. In that view, the "right" answer to the "cost per year" question would be found by estimating how quickly the stimulus plan (whether it be Bush tax cuts or Obama's proposal) closes the gap between employment over time as the economy lurches back to full output of its own volition and employment as kick-started by the government stimulus. Dividing by ten, in the Bush example, made little sense; dividing by one, as Krugman did, almost certainly made no sense either (link rot has crippled that old post but as I recall CEA estimates suggested that dividing by roughly 1.5 might have been about right. Darn Max for moving).

And unlike Krugman, folks currently talking about a $275,000 cost per job did not make an explicit annualized comparison to anything, although they certainly invited readers down a slippery intellectual slope with this:

3. President-elect Obama has said that his proposed stimulus
legislation will create or save three million jobs. This means that
this legislation will spend about $275,000 per job. The average
household income in the U.S. is $50,000 a year.

Well, spending $275,000 one time to create a $50,000 per year job that would not otherwise have come into being for ten years sounds like a good deal. If the job would have been created by the natural workings of the economy during the next year, maybe not so much.

A better defense of the Obama plan is here - briefly, Joe Klein notes that a lot of the price tag, including the tax cuts, are not directly tied to spending-related job creation.

Let me close with this missed Self Awareness Moment from Krugman's new column:

As the debate over President Obama’s economic stimulus plan gets under
way, one thing is certain: many of the plan’s opponents aren’t arguing
in good faith. Conservatives really, really don’t want to see a second
New Deal, and they certainly don’t want to see government activism
vindicated. So they are reaching for any stick they can find with which
to beat proposals for increased government spending.

Uh huh. And by way of contrast, there is not a lib to be found who is anything other than agnostic about the efficacy of Roosevelt's New Deal, and nowhere are there libs who are anything other than dispassionately curious about whether government activism and increased government spending really can be effective in improving society's well-being. The only cheerleaders are on the right - got it.

MORE: I am so profound and insightful on government spending and job creation that it will have to wait for a new post. No breath-holding...

WE SLOG (AND BLOG) FOR YOU: The details seem to have been lost in the transition but here is Krugman's recap of the original Obama recovery plan as presented by his advisers Romer and Bernstein (before Nancy Pelosi et al got ahold of it).

Let's focus on the chart projecting the unemployment rate with and without a recovery package (foolishly titled by Krugman as a "stimulus" plan.) At its peak, the Obama plan lowers unemployment by roughly 2%, or about 3 million jobs. The trick is to estimate the total area between the two projections, since that represents the job-years created by the plan.

My eyeballometric estimate is that 2009 starts with a zero job creation and ends with about 1%, for average job-years during 2009 of 0.5% of the work force, or about 0.8 million.

2010 starts with the plan at 1% to the good and ends with about a 2% improvement in employment - let's call that 1.5% for the year, for net job-years of 2.4 million.

2011 starts with a 2% improvement and ends at roughly 1%, which gives us another 2.4 million job-years.

Finally, 2012 starts at 1% and ends at roughly zero, so let's credit the plan with another 0.8 job-years.

Total job-years equals 6.4 million; total cost is about $800 billion (the price tag went up after Pelosi stepped in). Cost per job-year, or annualized job cost, is about $125,000. Hmm, yes, that is my final answer. Now let's ask the audience - here is Krugman, from his latest column:

The true cost per job of the Obama plan will probably be closer to
$100,000 than $275,000 — and the net cost will be as little as $60,000
once you take into account the fact that a stronger economy means
higher tax receipts.

Well, $125,000 is closer to $100,000 than it is to $275,000, so whatever - most folks seem to have made up their minds about Krugman's veracity, but this can be one more data point. And do keep in mind - annualizing the cost to present a smaller number doesn't really represent the cost. Even if the true *annual* cost is just $125,000, the total cost is still what it is.

Or maybe Krugman could help GM sell their cars. That new piece of rolling rubbish doesn't "really" cost $20,000 - since it will probably last at least, ahh, two years the cost is only $10,000. Yeah, that will move the iron - just don't anyone try writing a check for only $10,000.

Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s
how to think about this argument: it implies that we should shut down
the air traffic control system. After all, that system is paid for with
fees on air tickets — and surely it would be better to let the flying
public keep its money rather than hand it over to government
bureaucrats. If that would mean lots of midair collisions, hey, stuff
happens.

Well, the idea that tax cuts are *always" better is pretty bold, since corner solutions are rarely optimal. That said, what an absurd example - is it really inconceivable that a private system of air control could develop in the absence of a Federal government? The current system might well be more efficient that a private alternative but the notion that only the Feds stand between the flying public and frequent collisions is daft. But let me make a more forceful case for tax cuts, relying in this newly-developed Krug-logic: anyone who thinks that Federal spending is more efficient than tax cuts believes that the entire private system of restaurants and diners should be closed down in favor of government-run cafeterias located in every Post Office. Yeah! Chew on that!

Comments

Some writers just haven't (a) caught on yet that there earlier works are archived, and(b)figured out how to google them to avoid what should be real embarrassment at being caught out as Krugman just was by you.

Or, such writers may be fully aware that their old words are out there but will never reach a significant percentage of their current readership. That's what I think is going on, plus that Krugman is a shameless liar.

Today the Luciferian HOBO is going to tackle global warming, which is caused by cars, as we all know. He's wanting a standard of 35 mpg. He should make it 70 mpg because that would be twice as good, and, say, 105 mpg in California to make Arnold happy.

The most recent glaring example I can think of was the lengthy NYTimes piece explaining how the housing bubble and the credit collapse were the fault of GW Bush. It was trivially easy to impeach the article thoroughly using nothing but previous writings from the NYTimes. I think they just assume that not many people will bother to drag up their earlier pronouncements.

TM, do you have any plans to tell us anything about changes to Typepad, or a switch from Typepad to something else?

Clarice: My but you have faith in Krugman's desire to at least appear to have integrity or fear of being embarrassed. I gather that he is "beyond" any such considerations. It is certain he feels himself to be above reproach (by the end of this administration he will no doubt feel that he is above just being approached too, at as it concerns the unannointed.)

I imagine that he figures anyone who had the ability to "google" out his hypocrisy and duplicity would just keep mum about it -- either that or he thinks (knows?) "they don't really matter". The whole sick crew is banking on the media just drowning dissent with lies, innuendo and personal attacks.

Nobel prize? Someday they will be putting them in crackerjacks boxes.

The arrogance of these people. While not the only cause of their supercilious hubris, the bubbles they live in -- bubbles paid for by the rest of us -- allow them to avoid not just reality at large, but basic human standards of comportment.

I am beginning to think that, come the Revolution, we should just shut down the Ivys, seize their endowments and put it toward the national debt.

The ONE HOBO tried, but China and India just are too bad and should stop polluting. He mentioned sustainable auto industry loans(5 years like Val) and green cars.

I think what the HOBO enjoyed most was outsmarting Willy and Hilly on those Chinese and India deals for cash. The government and banks just had to be fair with their loan criteria. It all worked out, especially for Citi.

I was often been said that the Bush/Cheney politcal strategy was “Keep’em scared and you can do anything,” but now “Keep’em scared and you can do anything” kind of sums up the entire Obama/Biden economic strategy.

The “politics of fear” has now been replaced with the “economics of fear”

Neo: That is why they said this of Bush. It is what they would do. It was all a projection.

Not for one minute could they conceive of what Bush and Cheney were trying to accomplish. Never for a second did they think it was anything other than a power grab enabled playing on people's fear of another attack.

They just assumed that Buah had beat them to it.

now we are going to see them act in complete accordance with their beliefs. It will not be pretty.

Why do we have to see shit when we listen to Rush? Same thing with some TV shows. I think they're partisan bigots who are a cult that wants to see things that aren't there and same seeing to anyone who doesn't give them cash. they used to just pain and do strokes and now it's weird accidents.

Tell the things that this was always the case, even when we listed back when radio first came out and they'll leave. Obama killed the Russians, Chinese and Indians and is a good guy.

I don't recall ever seeing any evidence of Blago wrongdoing. Is this entire impeachment based on the press conference of Patrick Fitzgerald, or have I forgotten something?

Posted by: Jane | January 26, 2009 at 01:24 PM

Actually, no, just about 2/3ds of it is. IIRC there are 11 counts in the impeachment, 8 of which relate to Fitz's presser. The other three relate to actually significant disputes between the legislature and Blago, where he basically ignored the legislatures actions or committed the state to spend funds without any budget approval from the legislature (this is the issue with the drug re-importation from Canada, where Blago essentially committed the state to spend money on the prorgram as part of a larger, multi-state deal, without ever getting the legislature to approve the money. But fair warning, that is just recollecting off the top of my head.)

Rush just pointed out the fundimentally eugenic logic of Pelosi's desire to spend money on controception programs in the stimulus package (too many poor people are being born, so the states are over burdened so this spending will reduce the number of poor people being born).

Thanks. It would be interesting to see what the precedent is for those sorts of actions. O must be in a bit of a hole here. If he goes to tough on Blago he will sing like a bird. I think they are setting him up so when he does sing, they can all just say he is crazy.

Fun article, Porch. Their first expert is a guy who thinks Rod should have given his daughter a state job. The third expert, "who leans Republican, declined to talk about Blagojevich specifically, but he did allow this: “It seems like the political culture of Illinois is being at least affected, if not influenced, by a slight degree of narcissism.”"

I'm just glad that quality isn't more widespread. It could so easily affect the President, but instead humility and a desire to serve others are two of the thirty seven virtues in which he is superior to every human being who has ever lived.

Actually, the way Blago puts it, Quinn & Madigan are the bloodsuckers, a round of popcorn for everybody. Way to go, Blago, I'll admit Fitz derangement syndrome has something to with it, the enemy of my enemy.

I think the Nazis proposed similar plans to Ms. Pelosi, as I recall. That should be put out there. It's truly a scary thought.

As to the Jack in the Blagojevich case, this is just getting better and better. I want to know when he starts naming names. Illinois is definitely entering a whole new arena of political theater. Are we going to get round the clock coverage from the CNN/ABC/Fox/NBC/PBS news crews? This is orders of magnitude more interesting than OJ.

Re: Krugman - hang him with his own words and those of the Times. Is there a web site like Biased BBC for the NYT? There should be.

You could also check out Clay Walters's Times Watch, and Don Luskin. who was practically Krugman's stalker back when he was predicting
a recession back in 2003 at the beginning of the boom after the last one. Just like the whole brouhaha over the dismissing of Kristol from the Times op ed page, after some minor quibbles, Greg Mitchell at the Huff Po, raises
the cardinal sin, he not only promoted Sarah after the Weekly Standard cruise, but stuck up for her afterwards; the nerve of him.

Well, I be PO'd at the US in Yemen too if I knew 94 terrorists were heading back to Yemen....and getting back to Holder and his Yemeni "lawyerly" connections...Yessir, thank goodness Bambi is at the helm - all that hatred for the US is gonna change into unicorns and rainbows sooner than we all thought....

"Yemen's president says his country is preparing to take back 94 Yemeni prisoners from the U.S. military detention facility at Guantanamo Bay, Cuba.

President Ali Abdullah Saleh told Yemeni security officials Saturday the U.S. will release the prisoners within the next three months, and promised to make sure they do not escape and rejoin extremists groups."

Krugman seems to believe Obama's claim that the economy won't grow (ever again!) in the absence of a government "stimulus" program. How else to explain the view that all those jobs represent net creation. Whereas I guess Bush jobs don't count because the private sector would have created them anyway. Maybe Krugman is onto something: Under Republican administrations, economies will grow in the absence of stimulus programs, but with a Democratic congress and president, the baseline growth is zero.

Applying common sense reasoning in order to explain faults in elite thought paradigms is like trying to use an abacus to solve e=mc2. Sounds logical doesn't it? Shame on you for trying to alienate the left from relating to the new power structure.

And just how did Google and You Tube get awarded all this business with the WH? I didn't see any competitive bids and if I were one of the other video posting sites, I'd sue. Their ad revenue is gonna spike upwards with this...

"but with a Democratic congress and president, the baseline growth is zero"

They jigger the numbers right out of the chute. The Romer/Bernstein analysis which TM linked forecasts a drop of 2.157 million jobs from 2008Q4 average by 2010Q4 "without stimulus" and then subtracts that number from the "with stimulus" number to get their 3.674 "increase". The estimated 2010Q4 total employment of 137,550 is lower than the 2007Q4 number. That's not much of a "gain" for a trillion bucks.

"With the country's history, it would seem to be time to wall it off and not let anyone in or out."

Oh no - that won't do in the Bambi Regime. No meanies allowed. After the people that can't be tortured or captured or killed are finished with their mayhem against the US - well then it's time for Direct Talks.

That of course comes after redistributing my money to the Common Good and, peeing in El Rushbo's cornflakes.

About that Yemen bombing, wasn't Plame's boss or something sent there?
And yes, Yemeni jihadis we returned there have escaped.
It's a foolish, backward little place, let's just throw it against the wall as an example to the others.

Who was her boss again, in the CPD of the CIA. I believe his name was something Wolf, he later ended up as security chief at the DOE, where according to Susskind he wanted to share all technical details of nuclear technology, what a fool. Damon is quite a fool, worthy of the engaging portrayal made of him in "Team America; World Police", and of course, his stupidity was proven yet again for his willingness to believe ridiculous claims about . . .He's in some upcoming film about Iraq, based on a Saddam loving Washington Post reporter's self serving and distorted account of the first
years of the war.

Sooo...US Embassy in Yemen attacked - actually a checkpoint near the embassy...and Pakistani's REALLY not diggin on Bambi. Gateway Pundit has some photos of lots of Islamist Paki's protesting against Bambi...

I'm feeling the love.

In the meantime, I wonder if Bambi has issued his community organizing orders to Susan Sarandon? Last I heard, she claimed he was Jesus and she was waiting for him to organize "the community"....and hey - has anyone started a list of slaves Demi Moore has pledged to get released? She did pledge to release a million slaves in 5 years...so she must be working hard on getting her 16K+ monthly quota?

Breibart should offer up some $$$ for Demi's List!

And $$$ for to ask Sarandon if she is invited to The Sermon On The Mount???????

House Speaker Salvatore F. DiMasi plans to resign from his powerful post tomorrow and depart the North End legislative seat he has held for three decades, saying yesterday that he is proud of his record and is departing with his "head high" despite ongoing ethics controversies swirling around him.

DiMasi - the third consecutive Massachusetts speaker to leave under a cloud - was reinstalled as speaker three weeks ago. But he has remained under public scrutiny, an Ethics Commission investigation, and a pair of grand juries looking at the influence-peddling allegations involving his close friends.

IIRC there are 11 counts in the impeachment, 8 of which relate to Fitz's presser.

I watched the dust up between Gerardo Rivera and some Illinois state dude (moderated by Neil Cavuto) on FNC.

The reason that Blago can't call any witnesses in regard to the Fitz presser is because none of the counts are in regard to the criminal Fitz doings, but then again they appear to have everything to do with it.

There seems to be a Catch-22 game going on with this impeachment that eventually will make Illinois look like the "Arm Pit of America", as if Obama hasn't already done that with his buddies.

Barack Obama's administration may be promising the "greatest ethical standard ever administered to an executive branch," and increased transparency over his predecessor, but it seems to be forgoing at least one transparency practice that was routine in the Bush White House— transcripts of the daily press briefing.

Hmmmm....

Couldn't have anything to do with the fact that the guy was totally inept, too...